GILTS: Pullback From Highs Extends As Wider Risk-Off Flows Moderate
Mar-19 09:36
Gilts hold away from session highs as the risk-off flow surrounding Turkey moderates from extremes.
- Signs of official intervention in the TRY countered some of the risk-negative flow.
- A reminder that UK market reaction to increased political tension in Turkey was more modest than what was seen in Bunds, given the greater linkages between Turkey and the continent.
- Futures just off lows, last 92.22.
- The bearish technical picture in the contract remains intact, initial resistance at 92.63, with initial support at 91.07.
- Yields flat to 1bp lower, curve marginally flatter.
- 10s ~1.5bp wider to Bunds at 185bp, above last week’s closing high (184.4bp).
- Domestic news flow remains, muted with focus on macro and cross-market drivers evident ahead of tomorrow’s labour market data and BoE decision.
- Our updated BoE preview can be found here.
- Expect focus to fall on the vote split, with no expectations for a move in Bank Rate.
- BoE-dated OIS little changed on the day, showing effectively 0 odds of a move tomorrow, 17.5bp of easing through May, 22.5bp through June, 35.5bp through August and 52bp through year-end.
- Our labour market data preview will be released later today.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Mar-25 | 4.459 | +0.5 |
May-25 | 4.281 | -17.3 |
Jun-25 | 4.230 | -22.5 |
Aug-25 | 4.100 | -35.5 |
Sep-25 | 4.051 | -40.3 |
Nov-25 | 3.959 | -49.6 |
Dec-25 | 3.936 | -51.9 |
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GERMAN DATA: New Metric Sees Economic Production +0.7% M/M in Nov
Feb-17 09:34
German economy-wide production rose 0.7% M/M (swda) in November, and but fell 0.6% Y/Y.
- Released today for the first time, this new composite economic indicator “combines four short-term indices covering most of the non-financial business economy, namely the indices of production in industry, construction and the service sector and the deflated turnover index for trade. Due to the relatively broad coverage of the index, it provides a comprehensive picture of the monthly development of economic activity in Germany", Destatis adds.
- The index value is the weighted average of the four subindices.
- In 2023, it accounted for around 71% of total value generation in the German economy. Sectors not covered include public services, finance and insurance services, agriculture, and a small "other services" group.
- Compared to GDP, the new index also does not deduct intermediate inputs, but only measures total production output. "GDP and the production index for the economy as a whole only develop similarly if the share of intermediate consumption in the production value i.e. the intermediate input ratio, remains constant."
- Destatis plans to reduce the time lag of the production index in the future.
MNI EXCLUSIVE: MNI speaks to former BOJ executive director
Feb-17 09:30
MNI speaks to former BOJ executive director Kenzo Yamamoto..-On MNI Policy MainWire now, for more details please contact sales@marketnews.com
FOREX: FX OPTION EXPIRY
Feb-17 09:08
Of note:
EURUSD 3.63bn at 1.0500 (could act as magnet).
USDJPY 1.59bn at 152.00/152.25.
EURUSD 1.52bn at 1.0500 (wed).
USDCNY 1.43bn at 7.2500 (thu).
- EURUSD: 1.0400 (331mln), 1.0425 (275mln), 1.0500 (3.63bn).
- USDJPY: 151.50 (450mln), 152.00 (545mln), 152.05 (630mln), 152.25 (410mln).
- AUDUSD: 0.6300 (473mln).
